Hardie's harm minimisation

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Mesothelioma is a dreadful lung disease, consigning its victims to a slow and excruciating death. Although it can take decades to develop, there is no debate about where the largest group of sufferers will come from: from employees of companies which mined or manufactured asbestos or those in the building trades who used the popular insulation lagging and building board in the years after World War II.

Two major companies - CSR and James Hardie - were largely involved in the asbestos trade, now long abandoned after its dangers were confirmed.

Corporate responsibility requires a company to deal with any problems it creates. It is not only a legal but also a moral obligation, especially when the company has profited handsomely from its ventures for decades. CSR has accepted that, as compensation claims for asbestos-related disease arise, it deals with them. James Hardie has taken an entirely different tack.

Startling evidence emerging over recent weeks at a special commission of inquiry chaired by David Jackson, QC, suggests Hardie has engaged in a series of corporate manoeuvres whose primary result appears to have been to limit its liability to mesothelioma victims.

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From August 1999, internal company documents show its most senior executives were planning a campaign of harm minimisation - to the company, not its victims - which would limit Hardie's liabilities. A key to this plan was to shuffle the ownership of the overall company offshore (to Holland) and leave a "rump" of two former operating companies in Australia with relatively limited assets which would be the only part of the Hardie empire vulnerable to challenge when push came to shove. The plan involved the creation in early 2001 of a fine-sounding body called the Medical Research and Compensation Foundation, which would own the two companies and handle claims from affected workers and users of its asbestos-containing products. The foundation and the two companies seemed at the time to have enough money at their disposal: about $200 million, supplemented by an additional tranche of funds from the parent company.

In all, the foundation had a total of $293 million available to disperse. The problem with such apparent largesse is that the latest actuarial assessment of claims by James Hardie mesothelioma victims or potential victims comes to $1.1 billion, presenting a shortfall of some $800 million. Mr Jackson has not yet completed his inquiries into this sorry tale of corporate juggling. He is due to report to the NSW Government at the end of June.

There is still evidence to be given by Hardie management, which has until the end of the inquiry to respond to the various claims and revelations uncovered so far.

A key question is what Hardie's executives and board knew in 2001 of its liabilities and whether the company underestimated the amounts it would need. It may be that there is a simpler, more benign, explanation for this complex corporate restructuring. If so, its queue of existing and potential victims would like to hear it.

Thorpe back with a splash

So Ian Thorpe will get to swim his favourite event at the Athens Olympics after all. And Australia, frozen in temporary national heartache at his initial disqualification a month ago, can again revel in anticipation of swimming glory approximating Sydney 2000. That might have ended the matter until Thorpe's 400m freestyle final on Olympic swimming's opening night in August. But matters of such crowd-stopping moment rarely pass so smoothly. Settlement of the issue is accompanied by suggestions that Thorpe's inclusion is the result of preferential treatment and that Craig Stevens was lured to make way for Thorpe by a generous financial incentive offered by a media company looking to protect its investment in television coverage of the Olympics.

Thorpe was treated preferentially. Had he been an also-ran athlete who erred in national selection trials (as Thorpe did by tumbling into the pool ahead of the starter's signal) and been disqualified as a result, few would have noted the departure. Thorpe's exclusion was the only point at which his treatment was even and consistent.

That does not mean, however, it was sensible or that Thorpe's misfortune should be regarded as if he was just another competitor. Rules are rules and must apply evenly. And, anyway, the Thorpe disqualification could not be overturned on an executive whim.

Elite sport is not about evenness of competition or equality of opportunity. The Olympics are contests between the best. If Thorpe had been excluded for reasons of retirement, injury, loss of form or dishonesty, there would be no justification for his restoration. But to have excluded him for one isolated error unrelated to form, talent or propriety seemed more than petty. Short of an extraordinary performance by one of his 400m rivals, who have not swum within two seconds of Thorpe's world record, victory would have been hollow in Thorpe's absence.

Craig Stevens may have sensed this when he stepped aside from the 400m, for which he qualified second with an Olympics trial time eight seconds slower than the Thorpe record. He gets to concentrate on his favoured 1500m while being remembered as the selfless mate who accommodated not only Thorpe but a nation's wish. Stevens got a reported $130,000 in interview and job fees to reveal to Channel Seven the worst kept secret in Australian sport. But that seems unlikely to have influenced his decision.